10+ Best Crypto ETFs To Invest In As A Beginner

Are you new to cryptocurrency investing and looking for a way to get started without the stress of picking individual coins? Crypto ETFs offer a beginner-friendly way to gain exposure to this exciting asset class. Here are 10+ Best crypto ETFs to invest in as a beginner in 2024.

1. Grayscale Bitcoin Trust (GBTC)

The first publicly traded Bitcoin fund in the US, GBTC aims to track the price of BTC, allowing investors to gain exposure to the leading cryptocurrency without actually buying and holding coins. However, be aware that GBTC often trades at a premium or discount to the underlying value of its Bitcoin holdings.

2. ProShares Bitcoin Strategy ETF (BITO)

This ETF invests in Bitcoin futures contracts rather than holding BTC directly. As the first true Bitcoin ETF in the US, BITO has become a popular choice, but be aware that its futures-based structure can lead to performance that diverges from the spot price of Bitcoin over time.

3. Valkyrie Bitcoin Strategy ETF (BTF)

Similar to BITO, this actively managed ETF also provides exposure to Bitcoin through futures contracts. However, BTF aims to hold contracts with a slightly longer time to expiration in an effort to reduce costs associated with rolling contracts over time. By focusing on longer-dated futures, BTF seeks to mitigate the impact of contango, which can erode returns over time when the futures price is higher than the spot price.

4. VanEck Bitcoin Strategy ETF (XBTF)

Another Bitcoin futures ETF, XBTF stands out for having the lowest expense ratio among its peers at 0.65%. Like BITO and BTF, it does not hold actual bitcoins. Instead, it invests in cash-settled Bitcoin futures traded on the Chicago Mercantile Exchange (CME). XBTF’s lower cost structure may appeal to cost-conscious investors looking to maximize their long-term returns.

Related: What Are The Differences Between Bitcoin and Bitcoin ETF

5. Bitwise Crypto Industry Innovators ETF (BITQ)

For a broader crypto industry play, consider BITQ. This ETF invests in top publicly listed companies deriving at least 75% of their revenue from the crypto economy. Holdings span crypto exchanges, miners, and other infrastructure providers. By investing in companies building the backbone of the crypto ecosystem, BITQ offers a way to participate in the industry’s growth without the volatility of holding cryptocurrencies directly.

6. Amplify Transformational Data Sharing ETF (BLOK)

BLOK offers exposure to the broader blockchain industry, investing in companies involved in crypto and blockchain development around the globe. Holdings include major crypto players like Galaxy Digital and Coinbase, as well as companies using blockchain tech in fields like supply chain management and digital identity. With its diverse portfolio, BLOK provides a way to invest in the transformative potential of blockchain beyond just cryptocurrencies.

7. Siren Nasdaq NexGen Economy ETF (BLCN)

Another blockchain industry ETF, BLCN tracks an index of global stocks that are developing or using blockchain technologies. This includes companies in crypto mining, blockchain-based banking solutions, and more. By focusing on the Nasdaq’s blockchain index, BLCN aims to identify the companies at the forefront of this disruptive technology trend.

8. First Trust Indxx Innovative Transaction & Process ETF (LEGR)

LEGR invests in companies either actively using or developing blockchain technology for a variety of applications such as digital payments, supply chain management, and more. The fund’s global portfolio includes a mix of established tech giants and up-and-coming innovators, providing diversified exposure to the growth of blockchain worldwide.

9. Bitwise Crypto Index Fund (BITW)

For exposure to a basket of top cryptocurrencies, consider BITW. This fund aims to track the 10 largest cryptocurrencies weighted by market cap, including Bitcoin, Ethereum, Cardano, and more. By holding a diversified mix of top coins, BITW seeks to provide broad exposure to the cryptocurrency market while mitigating the risks of betting on any single coin. Keep in mind, though, that the fund’s crypto holdings are still subject to the high volatility typical of this asset class.

10. Grayscale Digital Large Cap Fund (GDLC)

Another crypto basket fund, GDLC provides exposure to a market-cap weighted portfolio of large-cap digital assets. Top holdings include Bitcoin, Ethereum, Cardano, and Solana. Like BITW, GDLC aims to offer diversified crypto exposure, but with a focus on only the largest and most established coins. This focus on large-caps may provide a slightly less volatile option for those wary of the extreme price swings sometimes seen in smaller cryptos.

11. Global X Blockchain & Bitcoin Strategy ETF (BITS)

BITS is an actively managed fund that combines exposure to Bitcoin futures contracts with investments in blockchain-related companies. By holding both Bitcoin derivatives and equities involved in the broader blockchain ecosystem, BITS aims to provide a diversified approach to the crypto space. The fund’s managers can adjust the allocation between futures and stocks based on market conditions, potentially smoothing out some of the volatility associated with a pure-play Bitcoin fund.

12. WisdomTree Blockchain and Crypto Innovators Fund (WBIT)

WBIT invests in companies involved in blockchain technology and digital asset innovation. The fund’s portfolio includes a mix of established tech giants and pure-play crypto companies, with a focus on firms deriving at least 50% of their revenue from blockchain or crypto-related activities. By investing in both the infrastructure providers and the users of blockchain tech, WBIT seeks to capture the growth potential of the entire ecosystem.

Key Takeaways

1. Crypto ETFs offer a beginner-friendly way to invest in cryptocurrencies and blockchain technology without the complexity of buying and securing individual digital assets.

2. These funds provide diversification across multiple cryptocurrencies or crypto-related companies, helping to spread risk in a highly volatile asset class.

3. Some of the top crypto ETFs for beginners include the Grayscale Bitcoin Trust (GBTC), ProShares Bitcoin Strategy ETF (BITO), and Bitwise 10 Crypto Index Fund (BITW).

4. Other notable options include ETFs focused on Bitcoin futures, like the Valkyrie Bitcoin Strategy ETF (BTF) and the VanEck Bitcoin Strategy ETF (XBTF), as well as funds investing in blockchain industry stocks, such as the Amplify Transformational Data Sharing ETF (BLOK) and the Siren Nasdaq NexGen Economy ETF (BLCN).

5. Newer entrants to the space, like the Global X Blockchain & Bitcoin Strategy ETF (BITS) and the WisdomTree Blockchain and Crypto Innovators Fund (WBIT), offer unique blends of crypto exposure and equity investments.

6. As with any investment, it’s crucial to understand the risks involved and to only invest what you can afford to lose. Crypto ETFs can be highly volatile and may not be suitable for all investors.

7. By starting small, diversifying across multiple funds, and maintaining a long-term perspective, beginners can use crypto ETFs as a way to participate in the potential growth of the cryptocurrency and blockchain space while managing some of the risks associated with this emerging asset class.

Frequently Asked Questions

1. What is the difference between a crypto ETF and buying cryptocurrencies directly?

Crypto ETFs offer exposure to cryptocurrencies or companies involved in the crypto industry through a traditional investment vehicle. When you buy a crypto ETF, you don’t directly own any cryptocurrencies. Instead, you own shares of the ETF, which in turn holds crypto assets or invests in crypto-related companies. This structure provides a more familiar and accessible way for beginners to invest in the crypto space without having to navigate the process of buying, storing, and securing individual digital assets.

2. Are crypto ETFs safer than buying individual cryptocurrencies?

While crypto ETFs can offer some advantages in terms of simplicity and diversification, they are still subject to many of the same risks as the underlying crypto assets they track. Crypto ETFs can be highly volatile, and their prices may fluctuate significantly over short periods. Moreover, because the crypto industry is still relatively new and largely unregulated, crypto ETFs may carry additional risks compared to more traditional investments. As with any investment, it’s important to understand the risks involved and to only invest what you can afford to lose.

3. Can I invest in crypto ETFs through my regular brokerage account?

Yes, one of the main advantages of crypto ETFs is that they can be bought and sold through most regular brokerage accounts, just like stocks or other traditional ETFs. This accessibility makes it easier for beginners to add crypto exposure to their portfolios without having to open a separate account with a cryptocurrency exchange.

4. Are there any crypto ETFs that track specific cryptocurrencies besides Bitcoin?

Currently, most crypto ETFs available to US investors focus on either Bitcoin futures contracts or companies involved in the broader crypto and blockchain industry. 

5. How do I choose the right crypto ETF for my portfolio?

When evaluating crypto ETFs, it’s important to consider factors like the fund’s investment strategy, holdings, expenses, and performance history. Some key questions to ask include:

• Does the ETF invest directly in cryptocurrencies, crypto futures, or crypto industry stocks?
• What specific assets or companies does the fund hold, and how concentrated are its holdings?
• What are the fund’s expenses, and how do they compare to similar ETFs?
• How has the fund performed over various time periods, and how volatile have its returns been?